Healthy take-up in new Grade A office space, but rents to stay stable: Morgan Stanley
Morgan Stanley adds that much of the anchor renter take-up at brand-new Grade An office buildings seems driven by occupiers transferring from older CBD structures. This flight to quality could underpin greater openings in the second market that can bring about disintegration of rental expansion as property owners lower rents to load such rooms, the report elaborates.
In spite of the resilient take-up, Morgan Stanley anticipates workplace market leas to remain steady in 2025. The company is maintaining its Grade An office rental forecast unchanged at $12 psf each month for this year, comparable to the year just before.
The firm cites a couple of factors for its outlook: industry leas tracked by CBRE stayed steady in 2024 maybe even as IOI Central Boulevard Towers has been continuously contracted up. On top of that, mainstay tenant rentals, on a psf basis, tend to be cheaper compared to various other leases in just the same building. “So the new lease at Keppel South Central is unlikely to place much upward stress on market hires,” the report reviews.
IOI Central Boulevard Towers, a Grade An office project on Central Boulevard in the CBD, is nearing full tenancy. Last month, The Edge Singapore disclosed that the recently finalized project with 1.24 million sq ft of workplace is around 75% committed.
Among the occupants at IOI Central Boulevard Towers is Morgan Stanley, the anchor tenant of the 48-storey West Tower. Amazon will most likely occupy the overall 16-storey East Tower.
An anchor tenant has also been obtained for the building, that is claimed to be Manulife, Morgan Stanley’s statement adds.
Previously this month, Keppel South Central, a 33-storey commercial tower in Tanjong Pagar, attained its temporary occupation license. In a Feb 10 statement, Keppel declared nearly 50% of the workplace and retail spot at the property was committed or being proactively negotiated.
According to a February study review by Morgan Stanley, Singapore Grade An office leas are anticipated to stay stable in 2025, even as the office industry sees healthy take-up among new growths.
Regardless, whilst workplace market leas are anticipated to stay secure, Morgan Stanley anticipates rental fee reversions– describing modifications in rental fees upon the finalizing of a fresh rent out– to stay in the favorable single-digit range this year.
